Replication files for "The Full, Persistent, and Symmetric Pass-Through of a Temporary VAT Cut", 
conditionally accepted in the Journal of Public Economics.

DOI:

Authors:  
Tiago Bernardino, tiago.bernardino@iies.su.se      	(IIES, Stockholm University)
Ricardo Duque Gabriel, ricardo.f.duquegabriel@frb.gov 	(Federal Reserve Board)
João Quelhas, joao.quelhas@su.se	          	(Stockholm University)
Márcia Silva-Pereira, marcia.pereira@novasbe.pt  	(Nova SBE)

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*** ACKNOWLEDGEMENTS AND PRELIMINARIES ***
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We thank Banco de Portugal’s Microdata Research Laboratory (BPLIM) for their data support. 
For a full list of acknowledgments, please see the published paper or its working paper version.

The replication package is divided in 2, given the data access limitations:
(1) Stata code to produce Figures 1, 2, 3, 4, 5, 6, 7, A4, A5, A6, A7, A8, A9, A10 and C2, and Tables B2, B3, C2, C3, C4.
(2) Stata code to produce Figures 8, A1, A11, A12, A13, A14 and C1, and Table C1.

The first part of the code was tested on Stata 18.0 at the BPLIM external server using the NoMachine software.
Data for the first part of the code can be requested here: https://bplim.bportugal.pt/content/access-0.

Additional figures and tables were produced using Stata 17.0 in a Windows environment.
Access to the second part of the code can be done using this Replication Package folder.

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*** DATA ***
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(1) The data for the first part was provided by BPLIM and can only be accessed in a protected environment.

It is identified as follows: 
Banco de Portugal Microdata Research Laboratory (BPLIM) (2024). Supermarket Daily Prices Database.
Extraction: March 2025. Version: V1. BANCO DE PORTUGAL. Dataset.

The .do file "dataset_construction" merges all the datasets used and saves the datafiles in temporary files.

Two other datasets are merged into the main datasets (these can be founded under in "work_area/datasets/source" folder in the External Server) with the following sources:

- "ecoicop_categories.dta" ->  Eurostat and Statistics Portugal.
Link: https://ec.europa.eu/eurostat/databrowser/view/prc_hicp_inw__custom_16099146/default/table?lang=em (last accessed on April 2, 2025)

- "weeks.dta" -> based on Table B.5 of the Appendix (correspondence between each 5-day-period and the starting and ending dates).


(2) All the data for the second part was publicly available and can be accessed using the following sources:

- "inflation_expectations" -> Consumer Expectations Survey (European Central Bank) and authors' calculations
Link: https://www.ecb.europa.eu/stats/ecb_surveys/consumer_exp_survey/shared/pdf/ecb.CES_aggregate_indicators.en.xlsx (last accessed on April 2, 2025)

- "headline_food_hicp" -> Banco de Portugal.
Link: https://bpstat.bportugal.pt/serie/5739170 (last accessed on April 2, 2025)
Link: https://bpstat.bportugal.pt/serie/5739222 (last accessed on April 2, 2025)

- "google_searches" -> Google Trends.
Link: https://trends.google.com/trends/explore?date=2022-12-04%202024-02-25&geo=PT&q=IVA,%2Fg%2F121dvkby,Taylor%20Swift&hl=pt-PT (last accessed on April 2, 2025)

- "coicop_weights" ->  Eurostat and Statistics Portugal.
Link: https://ec.europa.eu/eurostat/databrowser/view/prc_hicp_inw__custom_16099146/default/table?lang=em (last accessed on April 2, 2025)

- "estat_prc_hicp_midx_en" -> Eurostat.
Link: https://ec.europa.eu/eurostat/databrowser/view/prc_hicp_midx/default/table?lang=en (last accessed on April 2, 2025)

- "producer prices" -> Gabinete de Planeamento, Políticas e Administração Geral (Sistema de Informação de Mercados Agrícola)
Link: https://regsima.gpp.pt/regsima/consulta/mercados?tm=8 (last accessed on April 2, 2025)

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***    CODE FOR PAPER   ***
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(1) All the results for the first part can be found in the folder "results", inside "figures" and "table" folders. 

The do-files inside the folder "main_code" must be run using the file "master.do" in the External Server of BPLIM.

BPLIM will collaborate with third parties to facilitate replication of this project's results. The replication process consists of opening an account for the "replicator" and providing access to the same computing environment used by the authors. 

More information here: https://github.com/BPLIM/Manuals/blob/master/Guides/01_Guide_for_Researchers/Guide_for_researchers_v072024.pdf

(2) All the results for the second part can be found in the folder "replication_package/additional_code", inside "additional_figures" and "additional_tables" folders. 


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***   REPLICATION (1)   ***
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* The do-file "1_dataset_construction.do" produces the full dataset without cleanings.

* The do-file "2_dataset_cleaning.do" cleans the dataset and produces the following table:
** TABLE B.2:  Data-Cleaning Steps for the Baseline Specification

* The do-file "3_dataset_descriptives.do" produces the following figures:
** FIGURE 1:   Food Prices during the Temporary VAT Cut in Portugal
** FIGURE 2:   Frequency of Positive and Negative Price Changes
** FIGURE 3:   Magnitude of Price Changes around the Temporary VAT Cut in Portugal
** FIGURE A.4: Prices of Beans during the 2023 Temporary VAT Cut in Portugal
** This do-file also produces the following table:
** TABLE B.3:  Number of Items for Each Category

* The do-file "4_event_study_baseline.do" produces the following figures:
** FIGURE 4:   Pass-Through Estimates of the 2023 Temporary VAT Cut in Portugal
** FIGURE 6:   Pass-Through Estimates of the 2023 Temporary VAT Cut Reversion in Portugal
** FIGURE A.5: Pass-Through Estimates of the 2023 Temporary VAT Cut in Portugal (A) Linear Trend Extrapolation
** FIGURE A.7: Pass-Through Estimates of the 2023 Temporary VAT Cut Reversion in Portugal (A) Linear Trend Extrapolation

* The do-file "5_event_study_daily.do" produces the following figures:
** FIGURE A.5: Pass-Through Estimates of the 2023 Temporary VAT Cut in Portugal (B) Daily Data
** FIGURE A.7: Pass-Through Estimates of the 2023 Temporary VAT Cut Reversion in Portugal (B) Daily Data

* The do-file "6_event_study_vegetable_oils.do" produces the following figures:
** FIGURE A.8: Pass-Through Estimates of the 2023 Temporary VAT Cut in Portugal for Vegetable Oils (A) Policy Implementation
** FIGURE A.8: Pass-Through Estimates of the 2023 Temporary VAT Cut in Portugal for Vegetable Oils(B) Policy Reversal

* The do-file "7_event_study_persistency.do" produces the following figures:
** FIGURE 5:   Pass-Through Persistency of the 2023 Temporary VAT Cut in Portugal
** FIGURE A.6: Distribution of the Cumulative Percentage Change for Treated Items

* The do-file "8_event_study_heterogeneity.do" produces the following figures:
** FIGURE 7:   Heterogeneous Treatment Effects Analysis
** FIGURE A9:  Oils and Fats (A) Policy Reversal (with trend-correction)
** FIGURE A9:  Oils and Fats (B) Policy Reversal (without trend-correction)
** FIGURE A10: Heterogeneous Net Treatment Effects

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***  ROBUSTNESS CHECKS  ***
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To run the robustness checks (this part will take some time to run), the global "robustness" in the "master.do" must be set to 1.

* The do-file "9_synthetic_control_did.do" produces the following figures:
** FIGURE C.2: Robustness: Synthetic Difference-in-Difference (A) Policy Implementation
** FIGURE C.2: Robustness: Synthetic Difference-in-Difference (B) Policy Reversal

* The do-file "10_robustness_control_groups.do" produces the following table:
** TABLE C.2:  Robustness: Control Groups

* The do-file "11_robustness_data_cleaning_methods.do" produces the following table:
** TABLE C.3:  Robustness: Data Cleaning Methods

* The do-file "12_robustness_outcome_variables.do" produces the following table:
** TABLE C.4:  Robustness: Outcome Variables

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***   REPLICATION (2)   ***
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* The do-file "additional_tables_figures.do" produces the following figures:
** FIGURE 8:    Event Study of Agricultural Wholesale Producer Prices
** FIGURE A.1:  Headline and Food Inflation for Portugal
** FIGURE A.11: Search Intensity on Google for Value-Added Tax and VAT in Portugal
** FIGURE A.12: Inflation Expectations over the next 12 months
** Figure A.13: Agricultural Producer Prices from Wholesale Markets
** Figure A.14: Industrial Production Price Index for Manufacturing Food Industries
** FIGURE C.1:  Price Evolution of the Basket of Treated Items in Portugal and Spain

* The do-file "additional_tables_figures.do" produces the following tables:
** TABLE C.1: Robustness: Alternative Identification Strategy

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